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Fiverr: The Future Of Work

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Summary Freelancing is less expensive than full-time employees, but also more rewarding for expert freelancers. Fiverr is well-positioned to capture revenues from the growing popularity of both freelancing and online freelancing. Valuation is currently a concern for us when assessing Fiverr. RossHelen/iStock via Getty Images While many are preoccupied with wage inflation, there is a counterweight working to offset it, at least partially. Hiring a freelancer is typically less expensive than hiring a full-time employee or agency. In addition, freelancers earn more than they would as employees for completing the same tasks even if they charge less. Therefore, it should theoretically be deflationary. Freelancing was already gaining popularity prior to the pandemic. However, 2020 saw an accelerated adoption as more people were forced to work from home. The world is unlikely to go back to how it was in 2019 because the pandemic proved that a lot of office work can easily be completed remotely. Fiverr International Ltd (NYSE: FVRR ), is poised to benefit from this shift and expected to see strong revenue growth. However, current valuations may not make it an optimal time to initiate a position. Industry Analysis Currently, 59 million people are freelancers in the United States, which is 36.7% of the 2020 U.S labor force. These numbers are expected to be 86.5 million and 50.9% respectively, by 2027. The company notes in its investor presentation that the addressable market in the U.S. is $115 billion. At just over $200 million in revenue, there is plenty of headroom to grow. The majority of freelancing still happens offline but is gradually making its way online. Source Fiverr faces stiff competition from other freelance marketplaces. Competitors include Upwork Inc (NASDAQ: UPWK ), Freelancer Limited ( OTCQX:FLNCF ), and Toptal LLC which is private. Although similar, they are slightly different than each other. Fiverr allows anyone to offer services on its platform. There are no vetting processes or skill tests required for freelancers. On the other hand, the other three do have a screening process with Toptal taking it to the extreme. Toptal only accepts less than 3% of all applicants after a five-step process. As a result, Toptal has a highly specialized talent pool. However, Fiverr does have a review system, so as long as someone hires a freelancer with good reviews then there shouldn’t be an issue. In addition, Toptal doesn’t allow its freelancers to set their own fees. Instead, it charges a buyer the market rate that would be expected outside of the platform. This leaves little to no room for negotiating. Fiverr, Upwork and Freelancer do allow people to set their prices and negotiate. Furthermore, the way clients find freelancers is different for each platform. Fiverr is basically a directory where freelancers describe their services and buyers choose the ones who they believe best match their requirements. On Upwork and Freelancer, users post a project and freelancers bid on it. However, Upwork also gives people the option of using an algorithm to find potential […]

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